Calcutta, March 31: The State Bank of India has decided to divest up to a 10 per cent stake in its life insurance arm.

SBI Life Insurance is a joint venture between the public sector lender and BNP Paribas Cardif. The SBI holds 74 per cent in the venture.

SBI Life Insurance has an authorised capital of Rs 2,000 crore and a paid-up capital of Rs 1,000 crore.

In a communication to the Bombay Stock Exchange today, the PSU lender said the executive committee of the central board had on March 30 authorised the divestment.

SBI sources said the board's decision was primarily an enabling resolution in the backdrop of the insurance bill.

Arijit Basu, managing director and chief executive officer of SBI Life Insurance said, "We are in discussion with our joint venture partner on the issue."

He added that valuation was also part of its discussion with BNP Paribas Cardif.

Basu said life insurance was a capital-intensive business and the company needed cash to sustain growth.

Though SBI Life is comfortably capitalised at the moment, it will need capital to sustain the 25-per-cent growth in the long run.

The bank had last week said it would reduce its stake in its general insurance company to 51 per cent from 76 per cent. This will lead to a corresponding rise in the stake of foreign partner Insurance Australia Group to 49 per cent from 26 per cent.

A valuer will be appointed to facilitate the price discovery.

The bank's decision to divest stakes in both the insurance subsidiaries follows the passing of the insurance bill in Parliament, increasing the foreign direct investment limit to to 49 per cent.

SBI chairperson Arundhati Bhattacharya had last month said the bank was in talks with joint venture partners for a stake dilution in insurance subsidiaries.

SBI Life Insurance had a net profit of Rs 156 crore for the quarter ended December. New business premium grew 25 per cent to Rs 1,633 crore, while renewal premium grew 33 per cent to Rs 1,958 crore.

Total assets under management stood at Rs 67,323 crore while net worth was Rs 3,980 crore.